how to kick ass in the subscription economy
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How to kick ass in the The Subscription Economy. Lean Startup Machine, São Paulo - 2013
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Subscription Economy
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Disclaimer.
I’m not an accountant or aspiring CFO/Controller!
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Subscription Economy
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Academia
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Offer Something in X amount + time + value + recurring payment.
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MASSIVEGROWTH
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!"!!!!
!20.00!!
!40.00!!
!60.00!!
!80.00!!
!100.00!!
!120.00!!
!140.00!!
!160.00!!
!180.00!!
!200.00!!
1! 14!
27!
40!
53!
66!
79!
92!
105!
118!
131!
144!
157!
170!
183!
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209!
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248!
261!
274!
287!
300!
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365!
Final&Result&
Final!Result!
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4 Main Reasons Behind Why You Sign for a Subscription
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Convenience.
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Allows you to focus.Core Services.
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Discovery & Curation.
Early Adoption.
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Status.
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BTW, you should offer all of them in some capacity.
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6 Essential Metrics for Your Subscription Business
•MRR•CHURN•ARR•CAC•ACS•CLTV Chaotic Flow by Joel York
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A two year subscription contract with a total contract value (TCV) of $24K
ARR = $12K per year = $24K / 2 Years
MRR = $1,000 per month
Example
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MRR.Monthly Recurring Revenue
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CHURN
% rate of customers that cancel over a period of time.
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1
Churn Rate= Customer Lifetime
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10.000
12%= ^ (Sua Startup) 83.3
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Tempo é Fundamental para calcular o Chrun.
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• Calculate out on an uniform population
• Measure the right interval for the customer
• Separate MRR Growth from Churn Growth
• Business Systems are a must to scale
• Exclude New Customers
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ARRAverage Recurring Revenue
Total Revenue for a Period of Time
Number of Customers for the Time= ARR
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Customer Acquisition Cost (CAC)
CAC = marketing & sales expensesX of New Customers
Cumulative ARR x CAC
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Average Cost of Service (ACS)
ACS = Recurring Expenses with Cost of Revenue All Customers that cost you something
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Customer Life Time Value - CLTV
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2 Important Rules of Thumb
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You must grow it!
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MASSIVEGROWTH
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100,000+ Enterprise and SMB customers Sending 8 billion emails per month
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How are we doing it?
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Company Snapshot!
• Founded July 2009
• TechStars graduate (Boulder, CO)
• 120 employees: – HQ: Boulder, CO – Eng: Anaheim, CA, Romania
$27M venture capital raised
Angel investors include: • Scott Petry (Founder, Postini) • Matt Mullenweg (Founder, Wordpress)
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We eat our own dog food.
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Our Own Backend Tools+
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Thanks!
Pedro Sorrentino@pedrosorrenpedro@sendgrid.comBusiness Development & Latam
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